EWEB Board of Commissioners — June 16, 2020

0:05 all right I've got 5:30 Holi let's get started ready to go all right welcome good evening everybody and welcome to the June 16th two thousand twenty twenty web board meeting this is a unusual event we normally meet once a month this month because of the significant amount of information and issues we had to cover we divided things up in having a second meeting and officially this is a work session so no decisions will be made tonight there'll be lots of discussion but no decisions made and neither will we have a public testimony so it's just a work session where we have two issues queued up I may have not said I my name is Steve Mattel I am the 2020 Board Chair the other four

0:50 commissioners and general manager plus several staff are also in on the line and the meeting is open to the public to follow all right we will start with the first item and that is an agenda check I'll just ask my fellow commissioners if anybody has any concerns about the agenda that was printed and made available so on the website I'm not seeing any buddy nodding their heads in any particular direction so we'll move right actually before moving into item two I am actually going to just insert a an item just on the chance that Commission any commissioners have any information to report whether it's related to the topics in hand or things that they've been doing in the last few weeks that they want to update the rest of the board and staff about we will

1:37 briefly do that you don't have to say anything but if you have something to say now would be that opportunity commission or Schlossberg I'll ask you to go first nothing and from finisher sloshed Berg Commissioner Carlson also nothing we're just continuing down the line here Commissioner Halverson I don't know I'm fine thank you all right John Brown yeah I just for the record so they can get it in the record I just want to reiterate my appreciation to staff and Andy especially for working with Oregon Department of Fish and wild to get the electrical service to the pumps to so they could do the fish sorting at the Liebherr damp time-sensitive he web came through thank you very much I think it was a very good

2:23 positive outcome thank you alright wonderful and I have nothing to add for a for the past few weeks uh I guess I haven't been up to very much all right we'll move into item number two and that's the Liebherr Walter evaluation project update and listed here is rod price and Mike McCann rod I'm not sure are you gonna say anything or are you gonna give it to me okay it's all yours I had no idea my name is on there okay good good evening president matal and commissioners this is Mike McCann on the electric generation manager for a web tonight with me I have Patty Boyle who's a web generation

3:08 contract supervisor and Markson occurred our generation engineering supervisor can you change slides please next slide please there you go we're here this evening to provide you an update on our work to date on 2020 organizational goal numbers I'm sorry I'm just I'm sorry I'm interrupting for a moment is that perhaps it's just me the the screen that I have has a I'm only able to see just the word triple bottom line analysis anybody else having that problem with their screen no I've got the full thing you need to change your format to a hundred percent from 150 Steve on the settings oh okay I'll

3:56 get caught up and I have a copy was sent to me otherwise I apologize for interrupting go ahead and like no no no problems so we're here tonight to tell you where we are on the TBL analysis for lower Mackenzie River project we have been doing work we started our work earlier this year we've made some progress we have a long way to go but really this is a check-in to provide the board sort of a an assessment of where we are right now and and particularly we'll give you an idea of the the work we've done to date but we have specific asks to think about how we might do the the TBL part of the analysis so the the socio-economic and in the environmental

4:41 piece so as we go through this and you think about things we might want to add or address as part of those pieces you can tell us later on so in the TBL analysis we're going to we've identified two bookends scenarios we're going to be looking at the first one scenario one is a complete return to service so this focus is on the Liebherr canal and we would resolve the seismic and and seepage issues on the libra canal and return it fully to service that includes the power house which also has seismic issues scenario two that we're looking at is just to make the repairs necessary to return the canal to a water conveyance structure so we would repair portions of the canal it would be a lesser extent than under scenario one and the canal would go back to being

5:28 more of a water conveyance for the river when we built the canal in nineteen there we intercepted a bunch of side streams and those side streams discharged into the canal and the canal carries that water out there have been numerous homes and and businesses and roadways and stuff constructed underneath or below the the canal that would need to be addressed if we were to move the canal so those are our book bookends I will tell you before we go any further there really are no easy answers here every path we are looking at has costs they are significant every path will take time and so really this is a long-term issue next slide please

6:24 so tonight we're gonna be focusing on Leaburg project cuz that's where we've done most of our work to date Libre can Walter build were licensed together they were relicense together in late 1990s and we have a perk operating license for the Libre project through 2040 so we're just about halfway through this Libre has to generating units produces full capacity about 16 megawatts but on average it's about nine mega watts of power we get out of there it is a five mile long cut and fill earth and canal and seepage has been an issue you know this from on many presentations we've given to the board over the years we it started to leak from the day we put it in the surface and it continues to leak and and that's really the root of a lot of the issues we're talking about right now next slide please

7:16 great thanks Mike I think this is where I pick up with ya you know over Thanks good evening commissioners yeah just a quick overview slide here has a couple of animations the first animation to come in shows the McKenzie River on the south side of McKenzie Highway and then set the animation coming in is the legal canal be ready diverting water you go to Lake at the night and we try to get to the river at legal path that lower left-hand side case so the trigger for this effort is related to a couple of problem areas we have a couple of animations here the first animation comes in highlighting aunt Belle Creek about two miles downstream from the dam where we

8:02 encountered in September of 18 indications of internal erosion which led us to take the canal out of service in October Hilton then the second animation coming in highlights another area near the downstream end of Canal at Ames at this location we discovered in april of nineteen internal medicine indications it's like this so this combination of factors a increased number of issues at Cogswell a new problem area of significance of Amy's that motivated us to take a step

8:48 back and look into our missed this this particular photo on the right shows the internal of those area hogs ball a small diameter relatively shallow void the cartoon on the Left shows what would happen if you left something like that untreated it would enlarge and deepen and destabilize the embankment that's why the canals a hazardous so our initial investigations at Cogswell focused on this internal erosion issue and what we can do about it those investigations revealed the presence of soft soils and those soft soils highlighted another concerning seismic concerns next slide please

9:35 [Applause] so taking a step back understanding that you've got an increased mission is appearing on the canal we wanted to take the step back and look at the canal and all of its risks head to toe so that we could develop a better understanding long term investment requirements that we would need in order either return the canal the service missed existing configuration or in a different manner to address risks so for the past few months we've had a consulting team and a desk review of all available materials they're looking at all the historical archives on construction construction

10:20 ponies engineering studies they're evaluating the side stream creeks to better understand the flooding potential that the creeks present they are evaluating the underlying geology which is highly variable along the five mile length of the canal they're also looking at past incidents and they're looking at historical repair Reference Desk medicals zooming in on one of the canal segments the control team has broken the canal into ten segments largely driven by the underlying geology and the configuration of the canal at Cogswell we have a relatively short low height embankment

11:05 and is underlined by the luteal deposits river deposits it also is under the influence of poncho up reading you can see on this map we have hodge Mill Creek which he contributes substantially swamp water flows to the canal also on these make sure you can see some of the small black squares those correlate to electric service meters I've got a home Barn shop and they give an indication of the differences in consequences along the canal for a given beach next slide please this one focuses on the name is reached at this location we have quite tall

11:50 embankment heights we'll also have a geology that's underlined by relatively shallow bed lock different conditions here make for different risks nests like these so in total as I mentioned there's ten leeches that we're going to look at tendon segments of the canal a variable length determined by geology primarily and canal configuration but also by potential to consequences the start and end station that's simply referring to distance from Lieber Blake so at the top he buried intake is 166 feet downstream of the lake at the bottom of the forebay

12:35 Beach is 24,000 and 750 when it starts from there we know that a couple of these reaches are going to require near-term investment whether it's returning your service or conveyance one longer item case the risk analysis that you are gonna do will better inform so we have a full comprehensive scope of repairs it's not just interval it's not just seismic you need a full understanding some of these reaches you are laying for example they are not presenting issues at this time we don't have indications of the need for near-term investment however we're looking at each and every reach so that we can understand those risks and

13:21 understand the potential for future investment needs that we will then reflect in the economic analysis Paddy's group is conducting a long-term economic evaluation thanks mark we good thanks and I'll just note my extreme is lagging quite a bit so I'm following along on paper as well so but if it's lagging for you let me know if I've gone too far ahead but as we move into the economic portion of the presentation as it relates to the triple bottom line I just

14:07 wanted to make a couple of important points as it relates to Leaburg performance the the project itself is highly dependent on assumptions on the value of power and as we've listed here levelized values range between 31 and $48 a megawatt hour over the reigning life of the project 20-year NPV this project is by comparison a fairly expensive project we can go into some of the drivers of those here in just a minute but I wanted to make sure that that folks realize that when we put these images together we put them in a pre canal outage condition so this is a

14:52 as if it were operating today with no no particular project no particular problems project costs associated with bringing the canal back to service or to convey water would need to be included in this analysis on the cost side and will drive the value down next slide please I'm sorry I just want to get clear of that last slide you're saying that that this this dam is a it's a money loser under even if it was operating and didn't require any significant maintenance that we're discussing right now it's a money loser at all but the high power sale that is that is correct

15:37 and that's a result of you can see on the left hand side those power values are significantly lower than what a historic look at power values would have been over the life of the project if you'd love lies those out and we'll also point out that they that range of values is above today's current value of power so the NPV is highly dependent on the power value assumptions this is a relatively small plant it has and and we'll see this in the next slide it has relatively high running costs when we go ahead and go to that next slide the

16:25 leeward plant in particular is outside burdened by some expensive cost drivers around high hazard facilities and requiring significant amounts of labour it has some complicated infrastructure with two fish ladders two screens and the tailrace barrier and it's got fairly old infrastructure that has a higher cost to run so your observation is correct commissioner matal that this particular project does not make money in its current state immunity a need for infrastructure and it might be also helpful to look at the next

17:11 slide where we've taken a quick look at Walter ville and its financial condition it's a little better off but not by much it's a smaller plant it only has a single unit it's doesn't isn't burdened with the same level of infrastructure as labor but at this point the medium case scenario and the high case scenario are are barely above water and the low is similarly just a break-even you know I realized this and this is over 20 year period so it's net present value over 20 year period as a million dollars without investment and and the Walter ville powerhouse while its operating and we haven't identified any infrastructure issues as Mark mentioned earlier on in

17:59 the presentation it was constructed in the same time period so it almost certainly has seismic issues along the canal that will eventually need to be addressed as well okay to next slide please I'm going to ask mark if we don't have any other questions at this point I'm gonna ask mark to cover our next steps as it looks at the risk analysis that he'll be leading with Burke dam safety personnel thanks Patti so as so next slide please we are embarking on the implementation

18:47 phase of the risk analysis we have workshops scheduled in July to four weeks of workshops participants will include a web staff broad consultant team that includes some renowned subject matter experts as well as a regulator they have the ER syllabus including their chief risk engineer that particular workshop will involve those participants and expect to be looking at up to 200 potential family models length of economic each one of those potential failure modes will be characterized in

19:33 terms of its probability and the consequence if it won't occur so that it can be plotted on a return those risks that plot an orange-red will receive further attention will be discussing risk mitigation measures associated with those next slide please risk mitigation measures could include engineering solutions it will be very case by case each reach of the canal is different and present different issues so risk mitigation measures a little different accordingly and then some risk some areas may not have you know terminal risk investment ease one risk

20:20 reduction measure as is the scenario of taking the canal on a service for power operation but even that risk reduction measure is still exposed to tributary Creek flow which can be substantially flooding on those creeks can actually approach the operating level of the canal normal operating now so they also would likely require engineered solutions to mitigate risks we will be developing after the workshop planning level cost estimates which the feedback into patties economic evaluation process it also be available for use in the public your public outreach and community will be taken off

21:07 so back to patio so thank you thank you so moving after mark completes his work this summer or as he completes that we really move into a probably a very interesting phase of the triple bottom-line analysis where we're gonna need to establish what the impacts of any investment in these this project would have on the community and the society at large and the environmental aspects of any of those investments we'd use some of these tools I've listed here in public engage in the public

21:52 engagement section to to really include the community on how this any change in in process either to return to service or water conveyance would impact them directly or as a part of the environmental review so for example if if it appeared to be the best direction to return the plan to service there's significant environmental impact associated with the construction of any of those repairs and that's something that we would need to consider in the overall decision-making it's probably a little easier to see the impact or to recognize a large impact of what it would look like if we were to route through as a water conveyance system would we continue through the same path of the canal or convey in different

22:37 manners back to the river shortening the path for those creeks from the from the current path along the canal or or different shorter paths so just sort of stay tuned for what those solutions would look like and how they might engage how we might engage and how they might impact us generally and how we will complete that environmental review we first really need to have a better sense of what the investment required is for either one of those bookended projects and then we'll be able to return with what I would consider a much more robust discussion of these last two legs of the triple bottom line where public engagement and environmental review come into play and what we'll

23:23 have at that point is a range of values for our options and some indications on what that public engagement looks like and and how we're completing the environmental review and the environmental impact for any path forward I mean put for the next slide I think we round things out just by a little bit of a graphic on how we see those ranges so like I said we have a return to service NPV water conveyance NPV along with analysis on societal impacts and environmental impacts of any of those options I think that pretty well wraps it up for what we have planned as part

24:10 of the presentation in hand I planted commissioner motile well I was gonna stay Thank You Patty and commissioners president Mattel before I open it to questions I want to touch on one of the things that came up in the there's actually the back and forth between you and Patty on on Leaburg and Walter Cole and essentially we we benchmarked our costs for these two projects against other power plants across the nation as part of a group that we we belong to for about half a dozen years recently and these plants are expensive and they're expensive for the reason that patty mentioned their their canal projects so the dams are five miles and four miles long their

24:57 earth and so they leak we have fish species that need protections we have fish screens and fish ladders and they have high hazard segments so we have seven-day-a-week staffing and and call-out ability so all those things sort of add up to make them very expensive hydro projects and we're kind of stuck with that before that for the time being there's not much we can do to decrease those costs there they're just but on the flip side they're beneficial because they are close to our service territory and they are elect estate projects so that's where we're at but with that I'd be happy to take any questions that you guys that the Commission might have all right well thanks all three of you for the presentation I've got about 35 minutes

25:43 remaining on this agenda item so I'll open up the queue who would like to go first I know I have questions but I don't have to be the one to go first [Music] I'm sorry I got a scroll up and down looks like dick helgesen wants to go first go ahead dick well first of all I just want to appreciate that we're beginning to get into a place where we can start our conversation around all this and I certainly want to acknowledge staff some point of view that this is kind of a longer-term consideration as we learn more and we do more assessment I wanted to comment on a couple of things and ask a couple of questions with respect to power values I know

26:31 at all expressed some surprise or at least pointed out that under all but the high market scenarios that that this project is underwater I actually am not particularly surprised by that because I am I correct in assuming that most of our power supply would be under water at this point relative to those market forecasts I mean even a Bonneville if we can do our part from the market yeah you know this is Susan Akram and I'm gonna jump in because Commissioner helgesson I would say that it with respect to the Bonneville contract if you're comparing

27:16 the all-in price of all the services we get from Bonneville to the energy price in the market yes it would look bad but that is not a good comparison the energy price that's out there in the market is in my humble opinion artificially depressed by the fact that we've got a lot of generation coming on board that is variable and has zero variable costs associated with it but it doesn't get you balancing it doesn't get you back up it doesn't get you all the things you need to do to reliably serve power and if you are gonna go to the market and try to buy all those services to make sure you had a reliable product for your customers it would come in and over at the bottle price III agree entirely with

28:03 with what you're saying there and my point was not the disparage Bonneville but simply to point out that all of our resources come at a higher cost than what for the most part our market projections currently show simply because the market is as depressed it is is and that historically is is somewhat anomalous and is sort of the reality we deal with and the context in which we have to make decisions going forward but it doesn't mean by any stretch than any of these resources are necessarily bad investments or were unwise investments at the time because as was pointed out earlier our mark the forecast looked quite different in fact actual power prices up until about

28:48 ten years ago looked quite different than these do so I'm just not surprised that that's what the numbers show going in just given the nature of those market forecasts the other question I wanted to ask and I'll be quickly done is that I'm assuming that what would be the source of power from which we would both in the short medium and long term replace these projects with should we make a decision to pursue an alternative that had a some ceasing generation would we actually be buying from the market or would we be using some of our other surplus resources or ultimately having to because these are part of our Bonneville

29:35 entitlement calculation aren't they right yeah mr. Hogg Isana we did not that was sort of beyond the scope of our analysis so I don't think we got into that I'm assuming unless Susan Ashman wants to jump back in that we would we would use our surplus and then supplement with the market yeah I can add just a little bit there that our surplus is sufficient to cover it in all but very low water peak usage periods so it would contribute to a shortage in those time periods but it really just is not a big enough generator to have a very significant impact given the length in our portfolio well I appreciate

30:22 you're gonna jump in remind every you and all of us it's a little hard to keep track of time aren't sort of a format but you're at about five minutes I'll try and keep everybody three minutes and will cycle through I'm not faulting you it's difficult when you know oh I will mute myself but anybody else like to jump in go ahead John well thank you I know this is scary looking at this pressure from Patti did NPD analysis include amortize the licensing costs when we rely since this 20 years ago I don't there's no amortize it's license cost in this NPV so upside-down before we're

31:13 evening serving the debt that we borrowed to relicensed it these are just it's the cash flows are just from up from revenue minus operations is that correct and there's no okay not recovering that cost to realize it because I think was I let me I was I misunderstood your question initially I thought you meant just the investment we made for the staff work and so on getting the license so I have to go back and look at the specifics of the of the analysis I believe the answer are still the same we do not have in here the debt service associated with those invested investments prior previously made as their their sunk or

31:59 previously and and the decision going forward looks at forward-looking values and costs okay but we still that money yep and and we're gonna and we're gonna that all along and and actually just got a live text from our folks in finance who affirmed that is the correct answer that we have are looking at forward costs forward benefits in this particular NPV okay in the second one in the water conveyance scenario that just assumes that's to me it's analogous to owning a full cemetery we have no income and nothing but expenses forever that's we would we would have to maintain that am and because that's where the fish

32:45 ladders are and it creates the lake and I mean I'm just thinking about the costs of the water conveyance scenario are gonna be huge what that is certainly a possibility it is possible that the water conveyance costs are not so dissimilar than the return to service costs you're right we would we in this case assume we would maintain the like and and all the infrastructure regarding that and we assumed that the water conveyance infrastructure would be significantly cheaper than for power production so the repairs required to

33:31 the canal would be either have a lower capacity or lower requirement and that's an assumption we really need to test with FERC Dam Safety you know I think met mark mentioned that stormwater flows can approach the normal operating level of canal and so it's entirely possible that FERC Dam Safety doesn't distinguish between the two scenarios in a material manner and will have investments that are roughly the same you know I normally feel bad coming to the Commission because I find sometimes I'm here at the Commission delivering a number of infrastructure issues if those of you they were a part of the Carmon Smith the conversation but it's it's not so just similar I feel like you know so long as we are really up front and and

34:17 honest about where we are in the conversation and the impacts that's that's usually what works out the best well thank you no problem Sonya unmute so when you say that there are that they took into account benefits was this just from a revenue benefit or their other benefits that have been somehow given a a cost they're not a cost but given some kind of analysis so the benefits included in the economics are simply the power value we did look at the the value of some of the

35:02 ancillary benefits of the project it is a legacy hydro and in this case it it offsets our requirement for the RPS it's not a significant value driven piece so that information wasn't clean so we looked at those and and you know the described a little more fully in the materials for the board and so the financial benefits have been included and when we complete the other aspects of the triple bottom line we'll be able to better articulate the other benefits to the community in particular for the existence of the canal itself the project in general in environmental benefits for the project and environmental impacts

35:49 for the for the existence of the project now I would note that those you know some folks attempt to quantify those we hadn't really addressed that in anything more than a qualitative way or expected to have a quantitative review of some of those more difficult items to quantify so and do these have black start capability I mean actually not at this time have black start capability yeah hey patty our Commissioner Carlson actually Lieber does but we we installed

36:34 that when we rebuilt one of the generators back in 2000 or so we've never tested it and maybe Martin can chime in here but I you know my understanding is that our concern is that powerhouse while it has black star capabilities that powerhouse is 1930 vintage masonry construction and it's going to be a pile of rocks that's my depending on the type of scenario if it's a seismic scenario it's unreliable if it's some other grid disturbance it could be reliable so it is that with both of them that we anticipate that both Walter William Lee Lee Berg would be rubble if we had a seismic event Walter Phil less so because it's a

37:21 different construction so it it is a sheet metal and I think that's best is transit siding and in a corrugated metal roof so it's it's more likely to be standing or recoverable than the Liebherr powerhouse thank you Mindy do you want to jump in while I was waiting to go last but then everybody has asked all of my questions okay well I'll jump in then I think Frank Frank was right raising his hand sorry Frankie gonna have to wait a minute longer I can wait president Mattel so I have a few I already know what I want to do with this thing and

38:07 it's neither the two options that you provided so let me ask a few questions as to why didn't you throw out one of the scenarios trying to find a buyer we did we talked a little bit about that and this is a plant that it could be sold it was just our perspective that the economic Stewie web are very similar to the economics to a buyer and and so if we were to sell the plant they would either need to have a much more rosier view of power values for them to want to actually pay for pay us to take it yeah well sure I mean we could sell it for a dollar it would still you know based on your assumptions we'd still be better

38:52 off there and we don't know you know we just don't know what the world looks like from somebody else's perspective they may have some hole in their portfolio that somehow this could fill I recognize that's a pretty you know optimistic assumption but it seems to me that we ought we ought to explore that because it wouldn't surprise me that if we could find a buyer that that would immediately rise to one of our sort of top options with what to do going forward so so the you don't need to comment on that right now but I'd like to see okay let's put some effort into that unless they have a really good reason not to pursue it if you just sort of know that it'll just go nowhere and the other questions are about the other components of the projects of the dam the bridge the lake if we were to pursue

39:39 an option that you know that resulted in decommissioning the power production out of that we don't we have why would we continue to maintain the lake why wouldn't we just open up well when we create a free-flowing River all the way up to up to Carmen right hey I'll take that one patty um Commissioner Matala I think that is one of our options that's so far down the road that we haven't really been thinking about what what it would look like but if we decided to decommission the project FERC didn't find somebody else who wanted to operate it we would we would be setting on a course to do just that and so we would probably at some point want to remove the dam and return it to a free-flowing River that that's obviously got significant cost

40:26 but it's also really far down the road that would be you know many years from now all right and then regarding the canal and you know the the fact that it is sort of the conveyance for some number of creeks if we were you know to try and look for solutions to provide as close to kind of a natural flow for each of those creeks down to the Mackenzie so I'm not trying to capture them all and the way that we currently do and return them to the Mackenzie at one point but let them each run their what would be their natural course each one of those would have to cross the highway or in one way or the other and I recognize there's other issues besides that but

41:11 that would be a big one would whoever is the owner of that Road ODOT would they be obligated to help in that regard or would we be on the hook mmm-hmm mark any ideas I would expect that to be Annie Webb burden to culvert or bridge the streambed there's also some downstream development that complicates return to the existing treatments it just seems to me that if we're gonna put ourselves in a position which we may not we had no vote is taken though just another thing like that but we're we're gonna move away from power production on this facility even if we

41:57 don't do it now it's just hard to imagine that we would continue this for you know forever but what we're suggesting right now is that we maintain this canal potentially forever it seems that that we ought to start pulling together a plan that figures out how to return that that watershed to a natural system so that each of those creeks can flow right down the river instead of um having to maintain a canal you know from here to kingdom come yeah and I would say and that will definitely be part of our alternatives analysis to the extent we can put them back that would be a lower cost all right well I'm looking at the time there's we've used about half of it Mindi I'll give you an opportunity to get into the queue otherwise we'll cycle

42:43 back to dick if he wants to take it for a second round um I'm just put me back at the end fair enough uh oh and I forgot Frank I think you wanted to say something yet president Mattel thank you I I think I hope the board gets the impression that we've just shot something across the bow here as kind of a recognition that there are a lot of issues going forward that we need to address many of those are economic many there's a lot of other ones related to the social side and the environmental side and both both benefits and detriments I also do think

43:28 that as part of that we would look at a lot more detail of maybe options in between so as you mentioned returning flow to the river because of development could be more expensive than keeping a single return course through a canal or I mean these are details that we'll have to evaluate will happen to work with FERC on it was you know you web who diverted flows back in 1930 and so it is viewed by FERC and in many cases legally that we would then be responsible for whatever ongoing cost to maintain it or return it there's also a number of legal obligations around things such as

44:15 irrigation and other requirements that that we've developed through the years so it's it's a pretty complicated set of options we're going to be looking at and there at this point doesn't appear to be any cheap option these are all going to require significant investments that we're going to have to plan for in our in our capital planning and financial planning all right well willow can open up a second round for those who want to take advantage of it and we'll just go in the same order in which we did the first round so dick if you have questions I'm looking at the time there's about 16 minutes each so I'll try and hold folks to two or two-and-a-half minutes just to

45:00 make sure there's enough time to get through everybody's questions go ahead and dick if you have them my Kurt my cursor was not cooperating um so I'll try to be quick just because I already overextended on the last round I just want like a comment that it's good that we're now in this conversation I want to acknowledge Frank's point and the admonitions earlier that you know this is a longer-term assessment I think from a board perspective it's a little hard to be patient and to kind of hold our anxiety around this since they're it's a consequential decision and we've been kind of watching it play out in

45:45 slow motion and it's only recently that we're now engaged with staff in a conversation about where to go from here but I I think it's true that there's a lot more information to be developed before we're really in a position to make a full evaluation and and that's difficult because I think in the absence of an opportunity to bring some closure to something that's that's um frustrating and difficult that we all tend to form judgments in the background and tend to have our minds made up so I just I just counseled us to be patient and to work with staff here to work through the information and to begin to understand the full proportions of what we're looking at as that information

46:30 gets developed I'd also say with respect to a sale I doubt that FERC would agree to transfer the license to anybody without full resolution of these matters which would if nothing else substantially complicate anyone's ability to acquire the project so thanks for the opportunity on the second okay John yeah thank you just a couple questions real quickly on if we go the what I call the metal roof and return that Lake to the free-flowing River and things um do we know that we have any legal obligation because it would wipe out the fish hatcheries because it won't have any water source do we have any legal obligation to the state or the Corps of Engineers because it's their

47:15 facility and number two that dam provides access to a lot of homes on the other side of the river and I'm just thinking about the legal ramifications of that I know there's an alternate way in but it's rather secured us just on those thoughts yeah a Commissioner browned it it's way too early for us to address those we haven't looked into that in any serious way I know when we you remember you will all remember a few years ago when we had to drain Leaburg lake because of the issue with the roll gates at that time we notified the hatchery that really we weren't responsible for providing them water the same is true with the with the Salmon Hatchery with the canal being down we've tried to help them out but

48:01 it's really there there need to get water for their hatchery but in terms of the access yeah we have we provided access to the residence through an easement that runs with the original origination of the project back in 1930 when that was one large undeveloped property on the other side of the river so that easement runs in perpetuity and we haven't looked at what that would look like to untangle Thank You Commissioner Carlson ok I have a quick question about the the NPV and how how those ranges are chosen so when we're looking at the negative

48:48 range I mean normally when I think of like the high the medium and low I think of the highest being kind of best-case scenario we're probably not gonna see too much more than that the low is kind of the worst-case scenario so you know what you're you know full range is but you how you mentioned that the low range is not even where we're currently at today it seems like what I've typically seen from from the pricing is that it continues to trend downward so I'm just wondering it seems like what this is suggesting it's even it's even worse than what the low ranges or what the worst-case scenario is so the range is the range before the value is is only

49:34 distinguished by the the forecast of the power values so the low range has a levelized value of I believe 31 dollars I'm not looking at the cyber moment of $31 today's today's today's price of the power is lower than that so that 31 I'm sorry if I wasn't clear early clearer earlier is for the entire 20 year period as opposed to just giving folks a context of where things are are today in terms of power now something could happen within the power markets you know tomorrow or next month that it shoots way up and we'd be looking at a little different power scenario but if you just look at that 20-year forecast against today's I see a burst of those

50:22 20 or forecasts of the levelized and you know the it's like 1970 curve is like this and then it goes down and then down and down like the closer you get to today it just keeps going down and down and down and down so I mean it it it seems to me we're probably not gonna get back up unless I mean the only the only one of the only scenarios I can see is if we have some major hit to our power so that the supply is now drastically shrunk or you actually get some kind of pricing around carbon that ends up you know fully pricing it so yeah though thank you - good points okay so those

51:10 are those are kind of some of the big scenarios that that could play out to drive that back up yep and and we make check with Susan Ackerman I know is on the line it's a she may have other things to add but but I think you you accurately characterize it the only thing that's out there Commissioner Carlson is the prospect of having a regional resource adequacy requirement because the that there is some capacity value to be had from these projects and there may be another value stream from an RA program but is also a long time away probably as soon as we will know whether there is

51:55 such a program will be in the 2020 to 2023 timeframe and probably wouldn't get operational right away so that is in itself about in the future ways in the future got it yeah most of my questions are poking around the issue of what are those other ancillary benefits that we could get from the project in terms of resiliency you know if there is a shock to the system as we're currently seeing with the pandemic are there other benefits that maybe aren't being fully recognized in that that are you know they're hard to quantify because it it's based on you know 20 or forecasts and things that we

52:41 can't really foresee I just want to make sure that we we do keep those those opportunities in mind and potential scenarios in mind I think that's a good point yeah and and to that to that and you know that gets directly to what Commissioner Brown oh we lost Frank well I'll jump in the queue when he comes back he can all right go ahead Frank I'm sorry Mike go ahead I was gonna say that that gets directly at what Commissioner Brown was just talking about in that we provide water to the hatchery we provide a lake for recreation we provide the canal banks for all the residents to walk along it's used regularly for that so there there

53:27 is a lot of positive benefit to the projects as well it just happens right now the the power value is in very very strong well I'll jump in the queue we just sort of mind everybody according to my clock anyways we got just a little over seven minutes remaining anyways I think we should be able to get through things so I guess I'll just echo what other folks said that you know appreciate you bringing the item forward it's you know definitely a bit of a shock as a commissioner to realize oh gosh here we go this is going to be expensive and unpleasant and all the rest but you know you've got to get into these you got a we got to look under the hood and get into it so thanks for bringing it forward as to I think what your original question is is how to think about some of the other items on

54:13 that triple bottom line the economic and excuse me the economic is sort of in some ways a lot easier to move forward with we're much more accustomed to that the social and the environmental are really hard to pin down Mike just kind of alluded to some of those social benefits that people get from it and well we've alluded to a bunch of them right there's - there's a small group of people who need access to the other side of the river and there's the hatchery and all the rest so that was kind of your question I think like how how - or not so much how to but to what extent do we factor those things in and we didn't create a laundry list per se but and but I guess we we do we have those things

54:58 matter I guess I would actually go back to you and ask you like how would you suggest we try and weigh those different attributes because I don't have the expertise - yeah it - you know the comment on that really but I can see that there's a lot of value to the community my concern is that it's it's a lot of value to a relatively small number of people whereas the so-so factoring that and yeah there's some folks who get some recreational benefit out of it but it's not the community of Eugene at large it's some small subset thereof and the same thing with everything else environmental and social that we would attach to that River so those would be some of my thoughts on those yeah we have to weigh them in and

55:43 then we have to weight them as well so appropriately so there you go hey hey Thank You Commissioner I think there's there's if there's a question in there I can use that as an opportunity to say in our next steps in addition to doing the work that mark Seneca was talking about to look at the risks we're we're going to be talking to the community and in fact the next time we're to come before the board to talk about this project is in September at the upper board meeting and so we'll have finish some more work at that point and we'll be inviting the community to have a discussion with us as part of that we have developed a communication plan for the upriver residents around this project and we'll be implementing that this summer as well

56:29 okay well the other thing I'll say is that whatever it is that we settle on and I know it will take some time to get to even a decision let alone the implementation but to me I think that with the vision ought to be complete right it can't just be a vision for what we want to do for the next two or three years we have to be clear about what that means for the next 20 or 30 years and for me anyways I guess I wouldn't be satisfied with a plan that had us sort of having to actively manage things in perpetuity I'd want to see a plan that had us gradually ease out of of that if we were not gonna extract power value out of it going forward if we were gonna try and separate ourselves from that and I'd like to see how we even if it took 30 years I'd like to see how we got all

57:14 the way out as opposed to forever had to manage that that stretch of river for even even though we don't have any any value that we're continuing to extract from it I'll stop there because of time constraints and we have just a little over three minutes remaining Frank or Mindy did you want to jump in I like to jump in um I just want to say well first of all thank you for that presentation it's a very complicated issue um I guess I want to say I don't want to rely too much on metrics for the triple bottom line which I know that we normally do but this this is such is so different in that

58:01 we've inherited kind of a mess basically and I think that part of it is it's our responsibility to fix it to clean it up and so some of the metrics for the triple bottom line don't translate as easily as if we were looking at say building a second water source or something like that that we were starting from the ground up so I guess I just feel a little bit like we have a extra sense of responsibility that's a little bit more qualitative than quantitative and so I think it's really important to remember that even though it's a huge bummer to have to clean up something that nobody here was directly responsible for but it is a legacy of our organization so that you can rest

58:51 assured that the FERC is not gonna let us walk away from that even if we wanted to so I think our cleanup responsibilities are going to be forced on us whether even if we whether regardless of how we might feel individually we're gonna be required to do that stuff well I think that sorry I'm sorry I maybe I spoke out of turn and now amped up a bunch of other folks my apologies Frank why don't you go ahead and if others have some responses to what Mindy said it or anybody else then let's get those as well Frank go ahead yeah president tell commissioners thank you I think do you know a different way of characterizing this is is not maybe as negative but to look at Leaburg and Walter bill is providing value to our

59:38 area for it'll be a hundred years and and I think maybe another way to look at that is maybe it's run its course and it's time to set a new course as part of its future I think the easiest part of this and there may be some people rolling their eyes in the background but the easiest part of this is the financial piece the more difficult one is looking at all of the other social and environmental issues and those are the ones that we are just gonna have to get on the table make assumptions get feedback get this take folders involved including regulators including citizens both beneficiaries and people who are negatively affected by it and explore all the options now with you with the exception of

1:00:25 investments in the safety of the canal we have some runway to determine a future vision for the area and I think that's maybe president Mattel what you were talking about making sure that we understand the full course going forward and then set the utility up to be able to make those decisions and work with citizens or explore options going forward and but I will say that you know we're so used to diving into finances there are a lot of other pieces to this whether its carbon attributes whether it's fish impacts transportation there's all kinds of things that are affected and those will be the more challenging ones for this board and maybe future boards to wrestle through a long ways to

1:01:10 go are my timer just went off which means the time to set aside for this item is has elapsed but I just want to check to see if anybody has any burning questions or comments they want to get in and on the record before we move on to our next item so I am just scrolling up and down to see if you have a question or a thought or whatever it is if you put your hand up I'll be able to see it as I scroll up and down all right I see Sonya go ahead so I am sorry just real quick on the other side of it while I was poking at benefits I also the fact that Leaburg in particular doesn't have the resiliency

1:01:55 benefit and actually may have more of a liability if it crumbles and then floods that entire area adding insult to injury I'm even less excited to keep around and and worried about the liability of that dam failing than in one of those catastrophic events so as you're looking at the the cost scenario there and and those benefits I would factor in that as well thank you yeah thank you all right well we will just quickly scroll up and down to see if there's anybody else for the hand up I am not seeing that on my screen we have scheduled a five minute break and then we have about 45 minutes give or take remaining for our second item I'll

1:02:42 just pull the board hands up if you want to take the break hands up I am only seeing one Sonia are you okay - oh that's fine we can keep going okay well I'm sorry about that maybe that's not the best way to do things I'll think about that next time it's okay I just wanted to check in my son I'm sure it's fine I'm sorry all right next time I'm gonna do that differently that was definitely not the best way here we go we are moving into item number four is 45 minutes on the clock I'll put them there in a minute it's the electric cost of service analysis Costa for the up River service territory and I have listed Deborah Hart to take us through

1:03:27 the presentation thank you services supervisor Alicia worthies who's a senior financial analyst as well as amber Nyquist from AES consulting as a little background in May of last year the board directed management to analyze the cost to serve the upper proportion of B Webb's territory later that year in October management returned to the board with high-level analysis that indicated that the cost differential was somewhere between ten and fifteen percent based on the results of the internal assessment

1:04:13 and direction he would have engaged EES to incorporate the upriver customer class into our cost of service model amber is here this evening and I'm going to turn it over to her to share results and then after that we'll hear feedback from the board amber thank you um so I have datian that I will go through if we can go to the next slide quick overview next slide slide please thank you okay so overview of why we might define different customer classes review of loaded cost of service analysis is followed by what were the inputs and assumptions we used for the upriver

1:04:58 analysis and results and then we will have time to discuss so next slide thank you um okay so customer classes the classic definition will be that you want to group customers that have similar usage profiles by load factor seasonality issues next to that would be a kilowatt hour or kW threshold agriculture I have an example of a horse power threshold another reason why you might define a new customer class would be a new service back when Bonneville moved to to your greets methodology we

1:05:44 did a lot of new large load studies trying to figure out the marginal cost of taking on a new customer for utilities in the area um the next one - that would be defined by geographical area so some utilities serve customers that are in different cities or taxing districts different states and then also there's some geology considerations which is I think kind of the impetus for for this analysis a really good example of aside from an up River analysis would be the Tanner electric cooperative up up in this up where I live they serve three

1:06:29 distinct areas one is the city of North Bend one is a smaller area west of there and then finally they serve customers on Anderson Island and they're served with a submarine cable and so those customers are assigned the costs associated with that submarine cable so their rates are look a lot different from the of the service territory other examples would be specific utility programs net energy metering critical peak pricing or a lot of large industrials have dedicated facilities lighting is another example where we allocate or directly assign plant values or OEM to street lighting the next slide please

1:07:15 here's our graph showing how a cost of service works so the idea is that we take the revenue requirements so that would be your budget numbers and we functionalized into components so any production transmission distribution shared services and then we take all the items in each of those buckets and classify them for either customer demand energy or just customer meters and finally based on those allocations the costs are assigned to each class

1:08:04 next slide so here is the 2020 revenue requirement that we worked with so just a quick overview based on your current rates we use 2019 low data to come up with load factors for each of the classes we verified that the rate revenues that we calculated based on current rates and matched what you guys have near customer system and then we also looked at a verified power cost to to confirm that those those looked good so no rate increase overall for the revenue requirement study and then on the next slide I just wanted to show

1:08:51 what an up River customer usage looks like compared with Eugene area so we looked at 3 customer classes residential small commercial medium general service and compared the usage characteristics between the two different areas and staff provide provided data for this so we see that there's about 2,500 customers upriver and their monthly usage actually looks quite a bit different between from the Eugene area counterparts as you might expect for example residential customers upriver use a lot more energy on a monthly basis than those in the jean area probably due

1:09:37 to eating fuels similar with medium general service small commercial was one that was interesting because up river usage was actually quite a bit lower and I'm going to use this to explain the results of the cost of service which is going to be in the next two slides so next slide so just overall assumptions we didn't change any of the allocation methodologies from the previous cost of service analysis a web uses a minimum system method for allocating costs so this means that the distribution system is in place because you have to serve customers on

1:10:22 your system and it's there are some costs that are related to the demand that a customer may have but the meters in place and the wires in place because you know you're serving a customer even if they only have one light bulb that they turn on this is a methodology that is commonly used by utilities in the northwest it results in having a larger fixed monthly charge which is good for revenue stability it also just I have some notes on here it it shifts costs from some of the larger consumption customers to the lower average consumption customers because you're putting more cost into that customer

1:11:09 component rather than on the demand so we did staff went through and came up with some information on additional cost to serve up River customers that aren't incurred for the rest of the Eugene area and one of those and I'll just use it as an example was the vegetation management cost so lots of trees of the Mackenzie River staff estimated about $650,000 per year just to manage the vegetation around them the system up there so we took this cost as long as well as other cost items like meter reading and we

1:11:54 assign those to upriver customers and we allocated the the cost to the classes based on customer which is consistent with the minimum system approach that I just described so next slide so here are the results keep in mind we did mono all of the customer classes even though table 2 shows just the 6 that we're comparing this table comparators the revenues that are currently being collected for you each of these classes and compares it with with the costs that are assigned to them and we see that upriver customers look like they need about a 14 to 31

1:12:40 percent rate increase compared to what they're currently paying and I want to make the point that this rate increases has kind of two sides to it one one of the sides was when I was talking about the different usage profiles higher average use for upriver residential this translates into they're actually paying a lower average rate than eugen customers so part of the the needed rate increases because they're paying less per kilowatt hour and then the other part of the rate increase needed is because of those extra costs that we assigned so next slide please thank you

1:13:27 so we did this this exercise and came up with some pretty good results we think that you know with additional tracking or tracing maybe there might be other costs that could in the future be assigned to upriver customers overall based on what we have now it does look like they need pretty large rate increases of above 10% but overall they're poor their contribution to your overall revenue requirement is pretty small it's less than a half a percent so that's all I have so I think ready for discussion thank you if you can go to the next slide I said a wrap oh yes so I

1:14:17 think we're just wanting to open it up for discussion and hopefully get some feedback tonight we're bringing back our financial plans next month in the July board meeting and that really kicks off our budgeting process so from there we'll incorporate the feedback we get tonight our other changes to budget assumptions and we'll be bringing back in faul our budget and rape proposals so hopefully we'll get some direction tonight to incorporate in this fall proposal Thanks all right well thank you all three of you for the presentation and for the information we got about 30 minutes remaining in this for this agenda item so I'll open up a queue would anybody like to go first if so just raise your hand I can see everybody now go ahead so now I'm curious about the last this

1:15:06 you're talking about the base rate in the amount or the sorry the difference I'm not saying this very well okay let me start over the the percentage increase and the upriver would need to be more because the basically the number of kilowatt hours that using makes that base rate less it's spread out the the fixed cost of the base rate is spread over more kilowatt hours because they're getting more out of that base rate did you look at actually just raising that base rate for for the upriver customers yes so you're right about the

1:15:52 interpretation we didn't look at specific rate design that is one way you could address it would be to increase the basic charge so it begs the question if we if we raise the base rate then would it bring how I mean how much would we move it that would offset the percentage and maybe you're not the right person to ask that question to but it's something that I would think about as we move forward with this potential concept because you know looking at a 31 percent increase is really huge but it may be that you know our fixed cost just to get power up there is really where that that charge needs to be loaded

1:16:38 because that's that's just you know to give them that first kilowatt of power it seems like we have to do so much more just to get them that without how much they actually use yeah we did sorry go ahead Adam oh I was gonna say can jump in and real quick because there was a a little bit of an effort several years ago where we were doing a lot more rate designed proposals and we did increases to the basic card recently so I think that and that was something that could be potentially addressed as a part of this whether it be for that class or for other classes if that was the direction the board won to provide okay

1:17:25 thank you very much for all the work I know none of this is easy to to put together so thank you well I'll jump in in the queue well for me it's a as far as the feedbacks a bit of a no-brainer if we are under charging them sixteen to thirty one percent that means you know they're being subsidized at a rate that's higher than then is acceptable according to our own policies I think when we exceed you know an estimate of you know five percent then we are obligated to take action on that and I know dick will say and I'll say on his behalf that there's some art and science involved in these calculations so it's not you know so we should be cognizant of that but my guess is that

1:18:10 when you get to the sixteen to thirty percent estimates that you know it's just art or science you're still going to end up by having been significant your subsidizing is gonna be taking place so for me it's just a question of you know how and when to implement increases to the rates for the upgrade of our community and so one question I would have for staff is that based on our gradualism policy or approach what you know what is sort of the maximum amount we would consider raising the rates by each year so that we were you know getting to where we needed to be in a relatively short period of time but might but simultaneously kind of a holding dear to

1:18:55 our gradualism approach well I think that one thing approach that we could take probably to bring back as part of a proposal and would be to look at some at the individual range of bills and see what that impact looked like because sometimes especially if we're looking at a basic charge and energy charge there might be some dispersion in the range so we could maybe bring back some more information based on some more detailed billing impact and come up with the plan and if there was a strong preference for you know a specific period of time whether that's a two or three year we could we could bring Bracco proposal to reflect that but it seems reasonable to me to go with like a two to three year range with some of these significant increases I mean that's roughly what I was imagining

1:19:41 in myself I'm only one out of five but you know two hits folks with a 16 or 30% increases especially in this particular year you know that's a pretty tough thing and at the same time it you know they are being subsidized and have been it sounds like for a really long time so they've gotten that particular benefit as well and we in my own view we need to fix it it's just a question of like how and when so in my view a yeah I'd like to see some proposals like the percent that we might increase in the the basic charge or what we might increase in terms of volumetric charges and over what period of time those would be the things that I'd want to see it's not you know that we could consider in July and August and Beyond and start factoring into our plans you know at the end of

1:20:27 the day it's not a it's a significant amount of money I think it was something like seven hundred thousand dollars is what they are being subsidized you know significant in some regards and not terribly significant and others the the rate impact the rate reduction as you said to the e web but soon me the Eugene community if we were to implement this immediately would be point or half a percent I think is what I read in the background or so it doesn't have a significant reduction so it's not about that to me it's just about the basic fairness issue of this that we I think are obligated to impose all right I'll stop there and open it up to others dick go ahead since you've made an effort to preempt my rebuttal I am I will simply

1:21:12 focus in on I'm not ready to call this a no-brainer first of all I think it's a case that when you're working with kosis that involve roughly a quarter of a million dollars in revenue requirement and 80,000 customers it doesn't take much proportionally to move numbers around that get you to things like ten or fifteen percent that's particularly true in classes like street lighting which aren't pertinent here but in my experience with kosis it doesn't take much of a change in allocation factors a direct assignment for relatively small classes to precipitate high numbers and those operate within a bandwidth of acceptable practice so generally speaking I agree that we want to not have subsidies but I think the practical

1:21:57 reality is that no matter how precise you think your cosa is you're always going to have some level of subsidy because all individual customers at some level are uniquely different and so the question becomes at what level do you choose to make those distinctions and on what basis and so the question I would pose to the board as a whole this kind of a policy question is so we've served up there now for 80 years or more this is not the first time it's come to our attention that maybe costs are higher in fact I think we new have known that all along so one question I would ask them might help illuminate the policy discussion is what has changed such that at this point we would choose to make a change and I'm not saying there necessarily isn't a reason for that I just haven't heard it articulated

1:22:43 because we're not dealing with new conditions here and then secondly you know I can think of at least a half a dozen situations within our cosa process and our service characteristic where at least there are some potential reasons why we might have subsidies of a similar level and I just would quickly point out things like overhead versus underground you know customers of electric heat versus other forms of heat downtown Network customers with solar arrays that don't pay appropriately a share of their fixed costs and so there are also customers who make a much higher use of our customer

1:23:28 service and our credit and collection functions and you know so if half a million dollars give or take is the threshold of cross-subsidy that we're concerned with it are we saying that that at this point our confidence in the position of our coats a model would cause us to go after those kinds of things as well or are we simply saying for other reasons that it's now time and appropriate to decide to make these particular folks the subject of a separate class and I I guess regardless of what we do here I just want to be clear about what our criteria are and you know it's not like it's not like if the subsidy exists here that that's new so on what basis are we choosing at this

1:24:13 point to make this particular distinction when there may be other reasons and other classes subclasses of customers where you know I mean our tree trimming costs are higher in the South Hills where I live you know probably not appreciably more on a per customer or per line mile basis than they are upriver so I'm just playing devil's advocate a little here and wanting to make sure that if we make a decision to go forward we're clear about in policy consideration what the parameters are that would cause us to reach out and make these distinctions now in the assistance and in the future perhaps with the prospective some of these other suspected areas where there might be crosscut the subsidies well thanks dick good points of course John go ahead and

1:24:59 then Mindy you'll have you next so we just have a comment on the delivery charge that so you talked about I think we're in the low 20s and right across the street up river laying electric is over 30 I think they're at 34 for delivery charge they've been raising their delivery charge quite a bit just food for thought because I'm I would like to consider that if we're going to talk about rates I'm I think you know to maybe address some of dicks points I know during our last ice vent and our snow event you know we have 2,400 customers up there but it's 50% of our physical service territory and over half our crews were there and you know we had to bring in you know it's very to me

1:25:45 it's very expensive and I do think we we have precedent where we charge don't we try to delivery elevation charge for water correct me if I'm wrong for providing services to people in different geographic areas so I'm willing to explore this further and see where we go with it but I'm not just say that you know I granted Nick we can't be you know a hundred percent equal to everybody but look at the logistics here you know half of our service territories out of 88,000 customers there 2,400 up there but it's physically physically 50% of our geographic area and we're an urban utility not a rural utility and I think it's just a matter of it's just

1:26:31 because we haven't done something in the past and we should look at the future I'll go ahead and pass it to Mindy then give you a chance to rebut if you'd like okay thanks I have a question in the comments so my question has to do with the usage and just the fact that upriver their residential usage is some is more than here in town and I'm just wondering if we keep data on customers that have taken advantage of some of our like efficiency programs and stuff and if there's a difference between what folks upriver have taken advantage of if that

1:27:16 is all as a factor so that's my question and then my comment is I feel like this discussion is very similar to the one that we just had and there's just some things that we've kind of been handed or grandfathered in if we were to design a utility right now we would never have such a disjointed geographic area and um while I understand the economic realities of this I don't want to make sure that we I want to make sure that we don't unfairly penalize people for some historical decisions that have been made I also understand that we need to move forward and obviously we can't stay with the way things were in the past but I just want to be sensitive to that also

1:28:02 because we are having this big discussion about the canals and to have the discussion about the canals and then potentially raising people's rates at the same time might seem a little overwhelming so I just want to make sure that we're sensitive to the the needs of the river folks in general dick I offered you opportunity to rebut if you'd like you so go ahead and then we'll jump back into a complete well regardless of where we land all family on this I want to know why and on what basis so that we're clear in a policy view about what criteria drive the decision I think we're up there serving those folks because in the early days we decided we wanted to do that and there were good reasons from from the perspective of our resource extraction

1:28:49 up there you maybe one of the reasons is well those resource extractions are not as lucrative as they used to be so that we don't have as many benefits to share maybe that's a reason or maybe we're tired of hearing from those folks whenever there's an outage up there because they don't appreciate all the good work we do maybe that's a reason I'm not sure how legitimate that would be or saying that is a reason but whatever the I it's not enough for me to say there is a 10% or 15% cost difference because I think there are other circumstances in our across the service view like the way we allocate the taxes that are paid on the International Paper Facility to the city of Springfield where we've made the opposite decision and decided to put those costs on our customers as a whole so in order to have integrity for me in

1:29:35 this decision we have to be consistent and clear about what our determining characteristics are and we need to apply those appropriately and if in fact the the distinction is there's half a million dollars give or take in cost differential on the basis of those customers well then I think we need to be prepared to apply that kind of a consideration equally when there are other instances where there may be similar cost transfers so it remains kind of an integrity and policy view that we need to come to and I'm not saying we can't come down one way or the other I just I don't want to make that judgment on the basis of kind of an emotional view and sort of reaction to

1:30:20 the fact that there's some level of of subsidy because I think the practical matter is that exists other places and I want to be consistent all right we have just a little under 15 minutes remaining so that's enough time for another full round if we want to Sonia go ahead okay well I mean to the point I think part of the part of the reason I'm willing to look at this is that we have had this policy and perspective that we don't want a lot of subsidy from a fairness perspective we don't want cross you know cross sector subsidies because there's other ramifications for that too so part of my impetus for what be willing to look at this is to try to short those places where

1:31:06 there's a lack of fairness I did a quick quick division of how much the eight hundred thousand divided by twenty five hundred customers it's like three hundred twenty dollars a year but that's a you know that's a significant chunk but that means that the rest of the Eugene area is subsidizing that smaller group up there for that amount I understand you know that we may do that I do wonder if on the the solar side because I think this conversation comes up more on the solar side than anywhere else is that we continue to say that we have a particular policy around our rate structure in support and not supporting solar because we don't want cross subsidies to cross subsidization of classes and that's why we we we price

1:31:54 solar in a particular way now if i'm wrong on that please enlighten me but that was my general sense and that's part of the the story that I've kind of become accustomed to talking with environmental groups and such about our policy around not subsidizing I do think you know it's it's valid to look at what we've done in the past but we should always be willing to look at it we're under we're in a new realm here I I don't feel like the history has to dictate what we do going forward otherwise we wouldn't be here so we should constantly be looking at at fairness and we should constantly be looking at how we do things and can we do them better and should we do them better so I would also like to be

1:32:40 consistent and I think that this is in line with our consistency principle of not subsidizing potentially now how we do that and how we get there and why we do that you know that's that's up for interpretation but and I I wanted to throw out on Mindy's point about the efficiency I also wondered if there was any focus up there on the efficiency side and so folks are using less power because they probably have more you know cold cold days and such so on the other side of that fairness in terms of utilization of our efficiency programs I don't know if they use them in a greater rate or not but I was also that also kind of piqued in my thoughts

1:33:26 there I'll jump in and uh you know be a third asking for some additional information according to Mindy's question so maybe staff could look into that a little for us and provide a some background material on that on the use of various programs that we offer and the extent to which River customers take advantage of that I'll jump in the queue just I'm just basically running the same order as we ran the first round through the first time dick I'll just say like eight long years together and everything was great and now we're gonna end on a policy dispute and I hate that but you know here we are I'll do my best to be civil and I know you will as well I my own feeling is sort of in line with what Sonja said is that the you know we

1:34:11 we we have a goal of eliminating subsidies when they increase beyond I think if it's three or four or five percent something like that because we recognize it's impossible to be precise beyond that degree and to answer the question well why haven't we done it for some other classes that you pointed out I think it's largely a question of opportunity and the mechanisms to kind of manage that so we have certainly talked about putting in place a demand charge which would get at the folks who have solar systems for example on their roof when we have the smart meters in place to allow us to do that and as you all know I have certainly argued for a change in in pricing or you know be

1:34:56 relative to the downtown network because they get so much additional benefit for that network and we all have to pay the costs and there have been a handful of the opportunities where I have advocated for that so I'm all for the fairness and advocating and and applying it equally across a range of situations and classes to me you know I don't think that when an opportunity presents itself to make an improvement we ought to take it I don't think we ought to stall based on the idea that we shouldn't do it for one class in two where have the opportunity to do it for everybody simultaneously which kind of sounds like the argument that I'm hearing that you know if and when we can charge properly for demand across all of

1:35:42 our residential and commercial classes when the smart meters in place course won't be here but I would be have been be the first one to raise my hand in support of it because that would be the fair thing to do I'll pass it to John Brown thank you and in the spirit of making sure I present both of my perspectives I gotta remind everybody that the up River residents a stilt they pay 6% of their bill to the city general fund and they don't get a penny and benefit from it and so there's you know that's granted they don't get to vote for any of us or you know kick us out if they don't like what we do but more importantly they're paying into that fund not because they want to because

1:36:27 they have to and they you know it's theoretically we get a benefit for it here in the city because it's general fund money and they don't and so I just want to make sure everybody keeps that in the thought process when we move forward on this thing we have a few minutes remaining actually more than a few does anybody else want to jump in the queue well it wouldn't be right unless you had you get the last word I don't know I'm ready I just want to make sure that as we leave this that you're not misunderstanding what I'm trying to say I'm I'm in no way saying that because we've done something historically we can't make a change absolutely that's wrong you know I just want to be clear about the basis for

1:37:13 making the change and if it's simply that there are cost differentials that we can now divine at a more discreet level than we've historically chosen to then I want to apply that across the board and if if you know if our residential customers in the city of Eugene are paying $300 3 2000 dollars in lieu of taxes to the city of Springfield for the benefit of serving an IP facility you know I think that's as much of a problem as you know the Upper River customers having higher storm restoration costs or tree trimming costs and so if that's the basis for making the change or changing the level at which we make these distinctions and and you know I agree in some respects there are timing issues although there

1:37:58 are in fact rate designs that we could imply without demand meters to treat the for example solar issues so you know and and if we're if it's if we're not willing to do that then there must be some other reasons that we're choosing to make a distinction here that I at least would want to have be exposed so that going forward as we administer our policy and make further distinctions that that the board could be clear and so I'm knowing in no way saying we can't do this or we shouldn't do this or or we we can't depart from history you know I just want to be clear and consistent in the criteria that we use to apply this going forward and if in fact it's a cost of service justification I want to know

1:38:45 why when there are at least several other examples of potentially similar or even higher are subsidies why why you know I'd maybe I'm wrong about that I don't know that staff would certainly agree that those even exist but that's my perspective I'll adjourn my diatribe I'm curious if we could get a list of maybe some of these you know places where we do cross subsidies um you know John brings up a really good point around silt if the you know if the whole basis for that is that we're paying prop we're paying this in lieu of taxes that

1:39:30 property wouldn't be taxed by the city of Eugene so does the Cosa handle that or not I'm guessing it doesn't because we just have to pay it on our total revenue it would be good to look at all of those different cross subsidies and see where we can kind of shorten up so that's it thank you I'll jump in for a moment sorry Frank I'll get you in a second this just really to respond some of dicks concerns and I agree we need to always be clear because we're all the best the only way we're gonna be able to justify what we do is if we can demonstrate a clear set of policies and criteria and show that we apply them evenly so you know we I think we already have on record that we don't generally

1:40:16 make changes until we can demonstrate that there's a roughly again I keep coming back to three or five percent but it's something like that because we can't be precise I think there's something to be said as you said that that the total amount of money on the table has got to be in excess of some amount you know we're not gonna go through a massive change for to save five thousand or ten thousand dollars right it just doesn't make sense to put that kind of staff effort into it so there's some threshold there and I don't know precisely what it is but we're talking about seven hundred thousand dollars and for me that succeeds whatever the threshold would be and then there's just the ability to act the mechanisms are they in place such that we could actually collect the money and is it practical essentially and in the

1:41:01 solar case it's currently not really practical but in in this particular case it is but I'm with Sonia we ought to be turning over these rocks as we can and if we can answer those criteria and perhaps others then then we ought to you know then we ought to pursue it I also want to agree with John Brown's point if there's some way to factor in the the silt tax there Center the silt piece that they pay so that that what we are in my view that that's that's reasonable we ought to factor that into the estimate of cost and value that the upriver folks get out of it Frank I think you had a question or something you wanted to say yeah I just wanted to

1:41:48 you know welcome to rate design you know I bet it's one of the most complicated and and emotional things that we deal with because it really does affect every customer I think it's probably a good thing for us to revisit the five principles that we developed around rate design we we do have a gradual for example we have one about cross-subsidies and and just make sure that we are applying those equitably probably not equally because I think that there are different cases there are different values such as you know the silt was brought up silt is a cost that's applied by revenue so it's not

1:42:33 applied by customer and that's that's a contractual cost that we have for some period of time that is then borne by each customer and so I think probably as we go forward before we come back in the fall we should make sure that we revisit this to the extent that I do believe over time we absolutely have to diminish the cross subsidies and part of that is because when we get into new products and services that for example would there would be a green attribute a carbon attribute for it for different types of products and services we need to be able to work off of a base that is fair for those who should choose it or

1:43:19 should not to choose it and so you know when you look at things that are very sensitive like basic charges we're kind of in the middle to low in now you know I think that Commissioner Brown mentioned Lane electric at a little over $30 you have Blatche Lea that is over $50 and then there's some in the state of Washington at zero and so if if you you have to look at subsidies within just usage patterns and so I think there's a bigger opportunity we need to make maybe recommit to the principles that or adjust the principles that we've developed and then we can develop the path forward

1:44:05 but I think that it sounds like the board is wanting to revisit that it can be a sensitive issue but I think it's probably time that we revisit that in a way that can provide some path going forward that's fair to everybody all right well I'll they're so remaining on the clock I'll just remind the board members that staff did ask us for some direction so that they know what to prepare what to begin to prepare next month in the month after and as they start to build a case for what the what the rates need to be not just for upriver but everywhere else this upcoming this stuff in December when we finally make that decision so I think it's it's incumbent upon us to be clear with them and I don't know that we

1:44:52 have I'll ask Debra if she feels like she has clarity and don't be afraid to ask for it because I'll just turn around and make sure everybody is clear that's our job thank you so this is this is what I heard the first was really clear asked to provide some additional efficiency usage for upriver and and we'll follow up and see what's available there but I'm generally hearing that the board would like us to further explore and look at what kind of proposal we could bring back with gradualism and maybe some division between the basic charge and the consumption charge we would wrap that up as a part of our

1:45:38 November rate proposal but we could certainly revisit before then well uh hold on I see your your hands Tanya but if you don't mind a second I think the person who maybe had the most heartburn about what that summary was as uh was dick so and maybe I just give you the opportunity dictum to shape that in any kind of way if you wanted to I would prefer because I'm at the risk of wearing a my welcome that you let Sonia go first I just wanted to note that if for some reason the cosa and again I've noted this before but if the closer the Chris always feels like this black lots of things go in and then you

1:46:24 know you know it just pops out with this magical number and all of the other ranges that we have they have arranged associated with them which makes me feel more comfortable I know that you can't have that when you have a price that you have to charge but what I what I will note on there is that I'd like to see if that silt isn't factored out of there like what is what does that rate look like if silt has taken out I mean if we really do believe as a board that that the benefit to the upper customers you don't get that from that property and or that payment and move to property taxes does the does it even doesn't even factor that $300 you know $320 a rate per person and per

1:47:11 service difference once we take that out I mean if if we decide as a board to take that out of that cosa if that's you know something that we can do on a policy perspective we may not even need to look at the policy changes and gradualism and all of that if that you know levels it out so anyway I just wanted to make sure that that got put in there because I'd like to see how that adjustment might change it all right well and I support that as well just to jump in real quick that I think there's a really good point that they are paying in somewhere that they don't get any benefit from so this is probably where the art meets the science but I'd ask our staff to kind of use their arts to try and you know factor that game go

1:47:59 ahead dick um on that point I think just be careful there because I think that might get us into a little bit of a slippery slope because they don't enjoy the same level of service that we enjoy here in town either they're exposed I think they have probably more and longer outages than we have so if if we take into a realm that's about what they get in benefit for what they pay you know then I think the city would argue well you know as a condition of your being able to serve anybody you're obligated to pay these taxes and you pay them on the revenues that you derive from all your customers so that's the franchise fee that everybody pays for having the benefit of the municipal service and you know they like everybody

1:48:44 else have to pay that so you know I think there are arguments on both sides I just want to say that I appreciate discussion I'm willing and to stay open on the question and when we ultimately get to it of whether we make an adjustment or not I think the timing and the optics are kind of bad just point that out the leverage in terms of fifteen to thirty one percent versus half a percent doesn't really present a bunch of people who are going to be marching down from the general populace to support this so I and I haven't yet heard enough clarity around the kind of the policy view that I'm persuaded but I'll stay open and I appreciate your your patience in

1:49:29 allowing me to entertain the conversation because normally we don't do that we are out of time but that's not going to stop me from offerings folks to make a few final comments would anybody like to do so all right Deborah you've got your get your marching orders so to speak and thank you for the clarity with which you kind of summarized the discussion hey Commissioner Mattel yeah yeah I would just say based on what we've teed up this evening it looks like it's gonna be a very interesting upriver board meeting in September yeah for sure and yeah as it as it should be right

1:50:17 there's an open discussion III presume that there are folks from upriver who are watching the discussion today and we'll probably start getting some feedback from them in the near future all righty well that ends um that ends that we have just a few minutes remaining for our final item which is the board wrap-up break I'll open it up to you first if you have anything I was I was just gonna thank commissioners I know that we kind of dropped a lot on you this evening and appreciate the discussion and the feedback these are not necessarily easy issues but I think that it's what we're going to have to work with work together on and work with

1:51:03 members of the public on and so necessary I feel like we got a lot of good and interesting feedback so thank you well I'll just jump in i was saying to dick just ahead of the meeting that he for all these years he's been asking for big sort of strategic issues to be brought to the board and today we got two of them so yeah dick be careful what you ask for I guess I'm happy for that I'd say yeah I think deliberation is a good thing and the more skilled we are at it the better as a governing body so we don't often have the chance to wade into it but it's a good thing Mindy go

1:51:48 ahead I just want to say that I'm very appreciative of this format of having a work session and I know I've been asking for for work sessions for a little while and I'm grateful that we've had it it's a lot easier to focus on these big strategic issues when this is kind of all that we're talking about instead of putting it in with a much longer board meeting so while nobody likes having more meetings per month I hope that we do see more of these when we grapple with some of these bigger topics yeah I'll echo that I think get to separate out once in a while a big issue like this for a its own separate meeting is sort of that just as Mindy said sort of

1:52:33 a useful way to go we kind of go on popcorn style I guess this time that means like if you have something to say you can you can you can speak go ahead so yeah I do wonder if part of the reason that we chose to service a river is is from a water protection standpoint - I mean if you have more control about the power lines and how they situate around the you know stream there if that gives us some ability to make sure that how we're operating up there is protecting the watershed I don't know I'm just speculating so I'd

1:53:18 be curious to find out if that's another kind of portion of the benefit that we get by servicing up rivers that control that we have both sides and other than that thank you for a great meeting I really appreciated the the discussion and I think that you know it's really good to have dissenting views and grapple through them I learned from those different viewpoints and I change and update my own viewpoints based on them too so I really appreciate the discussion well Anne Allah and by just appreciating my friend dick helgesen I can't I can't tell you how much how uncomfortable it is to find myself on the opposite side of a policy discussion and it's not exactly opposite sides I

1:54:04 know that and so you don't have to we don't have to get into that but nonetheless we're usually in in lockstep more often almost all the time and today we're not and I just want to be clear that there's nobody's opinion and I mean this you know about about us but then I value more than yours and your wisdom I see everybody myself included lean in amongst the staff when you have something to say because it comes from a place of a lot of experience and wisdom and so what you say and caring and so that that matters a lot to me and I of course will think a lot about the things you said they were not the things you say we're not lost in the in the slightest so I may just adapt my position become November and December we'll just have to see I I appreciate

1:54:50 that and I want you to know that I'm not at all offended it's a good discussion it's one that we have to have and it's the appropriate level of discussion and if there aren't descending use now and then then then we're probably not doing our work so I'm not at all offended and I'm not at all worried about where we come down because I think you have enjoined the discussion in a way that gives me confidence that wherever we land in the fall up will probably be the right place so no offense all right well thanks everybody uh anybody I'm just scrolling up and down here you guys are all the size of postage stamps so if I'd miss a hand that's the reason why I'm just checking real quick I don't see anybody with a hand up in anything they'd like to say so with that I will bang the gavel so to

1:55:36 speak and close out this meeting thanks everybody and I'm sorry I just closed out the meeting so I guess this is unofficial and off the record I'm not gonna be here on July 7th and I will work with Mindy as is needed to make sure she's all set to run that meeting alright have a great for you week see you soon